A Firm Issues 20-Year Bonds with a Coupon Rate of 4.8%,paid

question 33

Multiple Choice

A firm issues 20-year bonds with a coupon rate of 4.8%,paid semi-annually.The credit spread for this firm's 20-year debt is 1.2%.New 20-year Treasury notes are being issued at par with a coupon rate of 4.6%.What should the price of the firm's outstanding 20-year bonds be if their face value is $1000?

• A)$882.53
• B)$975.98
• C)$977.48
• D)$1000.86
• E)$981.23

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Definitions:

Vehicle Conversation

Dialogues or discussions that occur between passengers or between a driver and passengers within a vehicle.

Blindsight

A condition in which a person can respond to visual stimuli without consciously perceiving them due to damage in the visual cortex.

Dual Processing

The principle that our mind operates on two levels simultaneously: conscious and unconscious.

Cocktail Party Effect

The ability to focus one's listening attention on a single talker among a mixture of conversations and background noises.